Apr 8, 2020
Trudeau wage plan fails to halt layoff intentions at small firms
Bloomberg News
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Prime Minister Justin Trudeau’s plan to subsidize wages by 75 per cent provided a slight boost to small business confidence, but the proportion of firms expecting to cut staff still climbed to a record, according to the Canadian Federation of Independent Business.
The CFIB’s business barometer index rose to 37.7 at the beginning of April, according to a flash poll of 1,602 firms, up from an all-time low 30.8 in March. The uptick in confidence follows the federal government’s introduction of a $71 billion program to provide pay relief to Canadian employers as an incentive to keep workers on the payroll.
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“The small bounce back in business confidence we’ve seen since the beginning of the month is a sign that the raft of unprecedented government intervention has had some effect” Ted Mallett, CFIB’s chief economist, said in a statement.
Still, business optimism remains far below the historical average, and a record 63 per cent of firms expect full-time employment levels to be down over the next few months. Some 500,000 workers already lost their jobs in March, according to the median estimate in a Bloomberg survey of economists. “We’re nowhere near a return to business as usual,” Mallett added.
There are other troubling signs. A quarter of Canada’s small and medium businesses say their firms are not operating at all, while the average capacity utilization is around 35 per cent. Only a quarter of respondents plan to make capital expenditures in the next quarter, also a record.